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- 3 November 2013
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Yes agreed, i thought you guys were referring to some howard-era policy I wasn't aware of
More expensive to borrow if there's higher interest rates.
You want to borrow money for some reason, if putting it in the bank was 2% earning before you could conceivably borrow it from me for 2.1% (depending on risk), but if the bank is 3% now then now you've gotta pay me 3.1%.
Obviously the higher you go in required return, the fewer investments actually make sense.
And voila, recession.
Housing bubble and its associated debt.Yes agreed, i thought you guys were referring to some howard-era policy I wasn't aware of
that means why would you buy shares for 5% div when you can get a 10% at bank?
Housing bubble and its associated debt.
Make money cheap, you make asset prices high. We haven't had a decent interest rate increase since the early 2000's, hence the absurdity with housing.
Interest rates are about to er, change, so housing will get knocked over and take everything else with it.
Because of the inflation, over time the underlying assets of the shares will increase in value with inflation, where as the cash at bank won’t.
For example, over time as inflation devalues cash holdings, the range that Iron Ore price trades in will also rise, meaning the decades worth of Iron Ore in the ground, and alot of the long life infrastructure owned by the mining companies will rise in value too.
So with the share you will get your 5% dividend franked dividend, along with a rises in the value of your capital base, but with the cash deposit your 10% unfranked interest you have to devote most of it to paying taxes and offsetting inflation, so it’s not a real 10% return.
Unless you are using OPM.More importantly, no one ever got rich by saving money in a high interest bank account.
Remember that inflation means more living expenses which means less money to actually pay the mortgage with.Maybe :
https://www.afr.com/wealth/personal-finance/house-prices-to-correct-up-to-25pc-20220505-p5ait4
I don't think rates will go high enough to cause a crash. Besides, data from banks shows most mortgagees should be able withstand a rate rise... Particularly with a potential 5% raise thanks to Albo
What, like if someone bought AMP for $25 ten years ago, or bought Telstra in the last float at $7.40, AGL for $15?Because of the inflation, over time the underlying assets of the shares will increase in value with inflation, where as the cash at bank won’t
And a rocket under inflation and Australia collapseI'm hopeful of a Labor win and the promised 5% wage increase comes through, that will IMO kickstart the economy in a big way, the buying power will be given a hell of a boost and should really put a rocket under the economy.
Weren't you into peer to peer lending a while back, how is that going?Unless you are using OPM.
I am talking about the average market rate return of the share market as a whole, like buying the index vs something like a term deposit or bond fund.What, like if someone bought AMP for $25 ten years ago, or bought Telstra in the last float at $7.40?
Or are you talking about those who were fortunate to pick winners. Lol
The sooner the better, at least then they can recover, the longer it is held of the harder the recovery.And a rocket under inflation and Australia collapse
Well what you said didn't reflect that at all and was completely missleading.I am talking about the average market rate return of the share market as a whole, like buying the index vs something like a term deposit or bond fund.
Off course some individual share investments perform badly if you buy at the wrong time or the wrong company, as do some bonds and other fixed interest investments.
I have stopped all new lending and taking all available money back as it become available.Weren't you into peer to peer lending a while back, how is that going?
Yep still am, it’s going great. I use it as a place to store cash I need in the short to medium term (where the share market isn’t suitable)Weren't you into peer to peer lending a while back, how is that going?
How didn’t it reflect that, My point was that there is underlying assets in shares that provide an inflation hedge, and I gave one example of a mining company’s assets.Well what you said didn't reflect that at all and was completely missleading.
the rates don't need to go high , just cause jobs to vanish , folks without jobs struggle to pay rents OR mortgages ( and many landlords have mortgages as well , so no rent less income to service those mortgages ) so housing prices moderate meaning the bank is holding a security that MIGHT even go downMaybe :
https://www.afr.com/wealth/personal-finance/house-prices-to-correct-up-to-25pc-20220505-p5ait4
I don't think rates will go high enough to cause a crash. Besides, data from banks shows most mortgagees should be able withstand a rate rise... Particularly with a potential 5% raise thanks to Albo
Yep it's going to happen, the question is how much and for how long. Ultimately interest repayments will be the limiting factor for rate rises, unless central banks are actively trying to cause a deflationary enviornment/recession...
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